World Bank Leak: Biofuels May Be Even Worse than First Thought

World Bank LeakBiofuels May Be Even Worse than First Thought

An internal report put together by the World Bank and leaked to the Guardian claims that biofuels may be responsible for up to 75 percent of recent rises in food prices. Even environmental groups haven't gone that far in their estimates.

With soaring food prices high on the agenda for next week's G-8 Summit in Japan, World Bank President Robert Zoellick has been clear that action needs to be taken. "What we are witnessing is not a natural disaster -- a silent tsunami or a perfect storm," he wrote in a Tuesday letter to major Western leaders. "It is a man-made catastrophe, and as such must be fixed by people."

According to a confidential World Bank report
leaked to the Guardian on Thursday, Zoellick's organization may have a pretty good idea what that fix might look like: stop producing biofuels.

The report claims that biofuels have driven up global food prices by 75 percent, according to the Guardian report, accounting for more than half of the 140 percent jump in price since 2002 of the food examined by the study. The paper claims that the report, completed in April, was not made public in order to avoid embarrassing US President George W. Bush.

A US analysis recently came to the conclusion that just 3 percent of the food price increases could be attributed to biofuels.

The World Bank on Friday sought to limit the impact of the leak. A spokesman for the organization, who asked not to be identified, told SPIEGEL ONLINE that the report obtained by the Guardian was just one of many internal reports prepared on biofuels and that it was never meant for publication. He pointed out that the World Bank has long agreed that biofuels were a factor in pushing up food prices but said it has declined to put a number on the impact.

"Biofuels is no doubt a significant contributor," Zoellick said this spring, establishing the World Bank line on biofuels. "It is clearly the case that programs in Europe and the United States that have increased biofuel production have contributed to the added demand for food."

A 'Crime against Humanity'

Still, in an atmosphere of growing criticism of biofuels and increasing concern over the impact of rising food prices, the report is a bombshell. It estimates that rising energy and fertilizer costs have only accounted for a food price jump of 15 percent. Even the environmental group Oxfam hasn't gone as far as the World Bank report. In
a study released at the end of June, called "Another Inconvenient Truth," Oxfam said that biofuels have driven more than 30 million people into poverty -- but had contributed just 30 percent to the global food price rise.

"Political leaders seem intent on suppressing and ignoring the strong evidence that biofuels are a major factor in recent food price rises," Oxfam policy advisor Robert Bailey told the Guardian on Friday.

Demand for biofuels has risen significantly in recent years as industrialized countries seek to cut CO2 emissions by relying more on renewable energy sources. In April, London introduced new regulations requiring that 2.5 percent of fuel sold at pumps in the United Kingdom be composed of biofuels with the mixture to be boosted to 5 percent in 2010. The European Union has set itself a goal of a 10 percent admixture by 2020 across the continent. US President George W. Bush has also latched onto bio-ethanol as a way to reduce America's independence on foreign oil.

In a report published on Tuesday by the World Bank ahead of next week's G-8 Summit, the organization recommends that the G-8 "agree on action in the US and Europe to ease subsidies, mandates and tariffs on biofuels that are derived from maize and oilseeds."

Criticism of fuel from grains and grass has not just centered on food prices. With farmers in developing countries cutting down rain forest and draining peat bogs -- both valuable for their ability to soak CO2 out of the atmosphere -- to make way for biofuel plantations, many doubt that the substance is carbon neutral. Plus, some fertilizers used in the production of grains for biofuels release nitrous oxide into the atmosphere, a greenhouse gas that is up to 300 times more harmful than CO2.

The World Bank report obtained by the Guardian says that biofuels production puts pressure on food prices by driving grain away from food production, by encouraging farmers to set aside land for biofuels crops, and by triggering grain speculation on the financial markets.

The problem has become so bad that UN Special Rapporteur for the Right to Food Jean Ziegler called biofuels a "crime against humanity" earlier this spring.